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Suspected speculation in unmodified HOS flat | HK Weekend Property Market Recap

Squarefoot Editor  2024-01-30  #Movie

This week, the Housing Authority announced that they handled a Home Ownership Scheme flat resale case, due to “a breach of the live-in requirements”, where the original owner was required to hand over all profits to the Authority.

Although it’s unknown whether this resale case refers to the aforementioned Hoi Lok Court case, the Housing Authority said last year that it had already launched an investigation into the issue.

In August last year at Hoi Lok Court in Cheung Sha Wan, a homeowner sold their so-called ‘unmodified’ subsidised flat for HK$8.38 million, and left the market with a huge profit of nearly HK$4 million, which sparked speculation concerns over Home Ownership Scheme Flats.

The reported flat is an ‘unmodified’, 629-square-foot, three-bedroom unit. The original owner bought the flat in 2019, and listed it for HK$8.38 million, premium unpaid, making it the highest-priced transaction of record for the housing estate. However, many suspect that speculation was involved, since the flat was sold without modifications, suggesting that the owner may never have moved in and merely purchased the flat for speculative purposes.

In other news, a Hong Kong court has ordered the liquidation of China Evergrande. This is the largest liquidation case of a property developer in Hong Kong. Since the Group fell into financial difficulties, it has also sold its Hong Kong properties, for instance by selling its project in Cheung Sha Wan to VMS Group in 2021 before it was renamed The Vertex.

Meanwhile, the Hong Kong property market remained weak. Released by the Rating and Valuation Department, the city’s private property price index fell to 312.1 points for December. This indicates a cumulative drop of 6.8 per cent for the year of 2023, down 21% from its 2021 peak.

The latest release of six new Home Ownership Scheme flats includes 9,154 units spread across Kai Tak, Kwun Tong, and Yuen Long, among others. The most affordable unit is located at Long Tin Court in Yuen Long, with prices starting at about HK$1.48 million. On the other end of the spectrum, the most expensive unit, dubbed the "King of Flats," is situated in Kai Yuet Court in Kai Tak. It’s priced at HK$4.94 million, with a price per square foot exceeding HK$10,000.

Over the weekend, Hong Kong’s four biggest real estate agencies recorded three to seven deals for the city’s top ten blue-chip housing estates, with most agencies recording a drop in transactions. Hong Kong Property, in particular, recorded just three deals, with seven housing estates seeing no transactions.

Numerous cases have indicated that unless owners offer a substantial price reduction, it may not be enough to entice buyers to enter the market. We then review three cases that demonstrate this. 

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